A REVIEW OF 'DEBT: THE FIRST 5000 YEARS' - Part II
Economics is justifying behaviour that we would otherwise consider unjustifiable.
That’s the contention of the anthropologist David Graeber in his book “Debt: the first 5000 years.” Most of us think of economics as impartial and fair (it’s just maths, isn’t it?), but Graeber’s review of the entire sweep of human civilisation suggests that economics is in fact inextricably linked with violence. It is time to reconsider both the nature of economics and the role that we give its principles in other areas of our lives.
Economics is exchange
Most of us imagine that economics is fundamentally about exchange. Economics textbooks generally begin by asking us imagine a situation where John has eggs but needs shoes while Jane has shoes but needs eggs. They barter with one another until they agree how many eggs a pair of shoes is worth. Then they exchange goods and both walk away happy.
In practice, it turned out that John rarely had eggs and needed shoes at the same time as Jane had shoes and needed eggs, so John would give Jane an IOU for an agreed number of eggs in exchange for the shoes. Before long Jane was trading her IOU for eggs from John for a sickle from Frank and thus money was born. Eventually there is so much money floating around that banks were created to manage the flow, keeping centralised records of credits and debts.
It’s a neat picture and one that most of us would guess was the origin of money even if we hadn’t been taught it. The trouble is that, according to Graeber, there is no historical or anthropological evidence for it. To affect an exchange, the two parties must ‘barter’ until they agree on exactly how many of John’s eggs a pair of Jane’s shoes is worth today. In several languages the word for ‘barter’ is derived from the word for ‘cheating’ or ‘treachery.’ No society would last long if it were built on a foundation of people swindling each other.
In fact, barter emerges as the standard way that strangers (rather than neighbours) engage with each other economically. Because the parties have no existing or on-going relationship – indeed, they may prove to be enemies – they rely on barter and exchange.
If we really believe that economics is essentially about barter and exchange, do we really think that it should be the foundation for our whole society?
Economics is more than exchange
Undoubtedly our economic activities do involve exchange:
1. Exchange – we give because of what we get (or will get) from the receiver. If someone wants something from you, you give it to them only if you expect to receive something of equal or greater value in return.
But Graeber proposes that there are two other modalities to our economic activities as well:
2. “Communism” – we give because we have something in common with the receiver. If someone has a basic need that you can meet (‘basic’ in the sense of ‘simple’ - like needing directions - or ‘fundamental’ - like needing to be rescued from drowning) then you are expected to meet it not because you will get something in exchange but just because “that’s what any of us would do for each other.” This is the foundation of every human society. (Note: by ‘communism’ we’re not talking about a post-Marx political ideology around property ownership here).
3. Hierarchy – we give because we are different to the receiver. If the President or the Queen were to invite you for dinner, no-one would expect you to invite them back to your place the following week.
In the first modality, any personal relationship between the parties is irrelevant. Exchange is entirely based on our perception of the equivalence of things. By contrast, in the other two modalities In the first two modalities, it is the relationship between the two parties that is key.
It is common to conclude an exchange with words (or at least sentiments) like “Now we’re even” or “Let’s call it quits.” If there were ever any sense of obligation between the parties, the exchange has cancelled it out. A debt is an exchange which has not yet been completed and it creates a bond between the two parties. The repayment or cancellation of that debt removes the bond.
Where the bond is oppressive, this is of course a good thing. But a society with no bonds is no society at all. If a parent were to try to calculate how much they had spent on their child since birth and then insist that the child repay them, the fair ‘exchange’ would end the relationship. This (with roles reversed) is the scandal of the parable of The Prodigal Son.
We may dream of being independently wealthy so that we will not be reliant on anyone else, but in reality we will always be dependent on a myriad of external factors - and especially on other people. If we want money, it is not for itself but for the pleasures, comfort and security that we believe we will be able to exchange it for. In other words, even economics is just a means to a non-economic end. Our ability to enjoy the things that money can buy - like good food and homes and entertainment – is dependent on other people choosing to share them with us not because of what we have but because of who we are.
If we reduce economics to ‘exchange,’ we deny the broader realities of our existence and prioritise things over people.
Graeber even goes as far to say that the most distinctly ‘human’ things happen under some kind of ‘debt’ because it prevents people from walking away from each other.
Economics and the state
Whilst economics has traditionally described barter developing into currency and then systems of credit and debit, the earliest human records suggest exactly the opposite was the case. The Sumerians of ancient Mesopotamia (whom we have to thank for the 7 day week, 24 hour day, 60 minute hour and the concept of a dozen) appear to have created a system for managing the resources of the state using silver as the unit of account. They began with records of credit and debit, which required defining an exact equivalence between a portion of barley (the staple resource) and amount of silver. From there, actual pieces of silver came to be used in barter. In other words, money was a product of the State not of the free market.
An army of thousands would strip the land bare in days but if the king gave coins to each soldier and then required every family in the land to give a certain number of coins to the Treasury, then every family would be forced to trade with the soldiers in order to obtain they coins they needed to pay the king. Thus the army was provisioned, order and productivity were maintained – and markets were born.
Graeber argues that whilst capitalists like to think that “the market” and the “State” are (and should be) independent, the historical reality suggests they are interdependent – markets are the product of the State’s tax system.
Economics and violence
Predictably bullion predominates in times of war. A survey of how Western states amassed their wealth in recent centuries shows that trade, tax and violence are inseparably linked. When President Nixon finally ended the connection between the US dollar and an amount of gold in 1971, it was in order to create money to pay for the Vietnam War.
Today, the value of the US dollar is not linked to anything objective (like gold or silver) but to the United States as an entity. The world’s wealthiest nation is also the greatest military power in history, in close striking distance of any point on the planet. If it were not for its colossal military spending, the US would not run a budget deficit at all. But were it not for its military capability, it would not have the economic power that it has either.
Graeber contrasts the example of French colonisation of Madagascar with the response of Western powers to the emancipation of former slaves in Haiti to show that economic prosperity is not about the power of the free market but rather about who holds the gun. The final insult is to use the language of debt to shift the blame from the aggressor to the aggressee. The German word “Schuld” means both ‘debt’ and ‘fault.’
Even at an individual level, professional money-lenders have been universally despised for getting rich at the expense of the misery of others, frequently through physical violence. The most obvious expression of this in the English-speaking world is Shakespeare’s Shylock seeking his ‘pound of flesh’ from his defaulting debtor Antonio in The Merchant of Venice.
Linguistically, the word ‘pay’ comes from the idea of pacifying or appeasing; it is disturbing to realise that host/hospitality/hospital share the same root as hostile/hostage – they are two potential types of response to a person who “sits before” you (hostage comes from ob- "before" + base of sedere "to sit"); and the French ‘merci’ or Spanish ‘gracias’ (‘thank you’) are clearly not responses to fair exchange.
Achieving ‘equivalence’ requires stripping an object from its context. When that object is a person, that involves a level of violence akin to the force requires to split chemical or atomic bonds. Small wonder then that the first recorded word for “freedom” in any human language was a Sumerian term meaning ‘return to mother.’
“Nowadays people know the price of everything and the value of nothing.” Oscar Wilde
The English “thank you” means ‘I will think of you;’ the Portuguese “obrigado” means ‘I am obligated to you.’ In other words, ‘I am in your debt.’ They may have become empty phrases, but they are a reminder that life is more than exchange and that there are two sides to debt. In as much as it creates and maintains relationships of inter-dependence, debt can keep both parties human; where debt is treated as an abstract number, it de-humanises both parties.
If a family goes into debt because they have no other means of feeding, clothing or housing themselves, who is the more morally irresponsible: the family that prioritises their people’s survival and well-being or the creditors who insist the family is being irresponsible and should prioritise the creditors’ interests instead.
Graeber reminds us that markets, money and debt “are human arrangements and …, if democracy is to mean anything, it is the ability to all agree to arrange things in a different way.” It is time to reconsider the nature of economics and the role we give it in our society.